The Five Provisions Your Subcontractor Agreement Must Have
We talk a lot about contract provisions that protect you from mistakes made by your subcontractors. But in order to truly understand how comprehensive your subcontract agreement must be, you need to understand the five provisions that will protect your business and keep your project moving along smoothly.
The Hold Harmless Provision
In the hold harmless provision of your subcontractor agreement, the subcontractor agrees to take responsibility for all of the work they do and hold you, the general contractor, harmless. This includes any claims for injuries, property damage and deaths that have occurred in the course of doing the job.
Acceptance Of The Work
When a subcontractor signs on to do a job, it is generally accepted that the subcontractor has signed to fulfill all of the requirements of the general contractor. In an ongoing subcontractor agreement, it is assumed that the subcontractor accepts all of the terms of a job and agrees to hold the contractor harmless despite there only being a verbal agreement in place.
Suspect Insurance Coverage
Each subcontractor agreement has a portion dedicated to outlining all of the insurance coverage that the subcontractor carries for each job to protect the general contractor. Before a main contractor accepts insurance coverage from a subcontractor, it is important that the insurance be written by a standard insurance carrier. If the policy is written by a non-standard carrier, then you could be looking at financial disaster at months in court.
You must be sure to get a waiver of subrogation from your subcontractor against your company, and all of your company’s owners to completely protect the company in the event that the subcontractor creates a significant insurance incident.
Certificates Of Insurance
Even if your contract with a subcontractor is verbal, you should still insist on getting updated insurance certificates for the liability and worker’s compensation insurance. Your arrangement with your subcontractor may be verbal, but the job owner as very definite coverage minimums that you and all of your subcontractors must meet to be able to work on the job site. A certificate of insurance gives you the proof you need that coverage is in effect, and that you are protected from the work being done by your subcontractors.
Contracting relationships happen at a fast pace and deals are often consummated over the phone. But if you want to stay in business as a general contractor, then there are certain elements you will need to insist that your subcontractor agreement have to protect your company, and protect you personally.
Every contractor should spend time talking to an insurance expert on getting the right coverage they need from a standard supplier they can rely on. You can keep your business relationship profitable and grow your business faster if you follow the rules that go along with being a subcontractor.